Y'all seem to have missed an essential point. All Congress has to do to solve the deficit/debt problem is nothing. I've read this various places but I'll give credit to Megan McArdle in The Atlantic. The Bush tax cuts are time limited. This isn't some Democratic plot, the Republicans wrote it that way. There are a number of other deficit-reducing laws that keep being temporarily postponed, like cuts to Medicare reimbursements and phaseouts of farm subsidies. If Congress stops preventing those measures from being implemented, the budget will move back to balance.

That is, it will if you live in reality and understand that higher rates than now in force will generate more revenue. Some of you, like the 100% cretin, evidently don't even know what the word marginal means.

You may think that's not going to happen, Congress will never screw their campaign contributors by letting those rises and cuts become law. In their great wisdom, the American people have taken care of that problem by electing a Congress that cannot pass anything. 2012 will deliver an equally or even more polarized Congress, and the needed changes will finally begin, without the politicians.

"Benjamin Franklin: He that does not like Civil Society on these Terms, let him retire and go live among the Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it."

This isn't prospective. The Republicans promised those 55 and over tax cut after tax cut without less spending on themselves, paid for by debt. Now they want a drastic reduction in the benefits of society, but only for those age 54 and younger.

The right policy is to reduce benefits for those 55 and older, right now, to the level of taxes they were willing to pay. And let those 54 and younger decide for themselves what they want.

It's pretty amazing that the Democrats are essentially accusing the Republicans of overreaching and being infinitely ambitious when that's precisely what the Democrats did with the health care bill. The Right is merely listening to Rahm Emanuel, and not letting a good crisis go to waste.

No, Democrats, the fact that you consider yourself to be doing something necessary makes not the tiniest difference to calling you overreaching and infinitely ambitious. You can't force someone else to pay for something while you take the credit; it's ugly to a degree you apparently can't even fathom.

The point is that the government has a given level of spending. The money to pay for that spending will be raised either by taxing rich people or by taxing poor people or by taxing median people. If you tax the poor people they stop working and instead rely on the dole and charity. This is empirically observed. In fact you get optimal working hours out of poor people by taxing them at a negative rate, ie giving them a bit extra back to help them out. You're left with median people and rich people. For any given dollar, is it more moral to take it in taxes from a guy who makes $50,000 a year, or from a guy who makes $500,000 a year? It's a hardship for the guy who makes $50,000 a year, not so much for the guy who makes $500,000 a year. So it's more moral to take it from the richer guy. At some point, however, you're going to start getting perverse results from this philosophy, because the rich guy will get fed up and stop working hard, or will take advantage of tax dodges. At what point does this happen? Empirical measures of elasticity get you a figure around 70 per cent.

If you argue it should be lower, you are arguing it's more moral to take more of the money to pay for government from poorer people, not from richer people. What is the grounding for that claim? I haven't seen anybody make it here.

Mr. Steinglass, your moral arguments are incomplete. They're entirely about income and not at all about expenses. I'll explain what I mean:

If there were a general current among the poor of being all about spending as little as possible in order to invest, to claw themselves up and lead more stable lives, I'd be all in favor of giving them help via the government. That's the case because an immoral thing like the atom bomb, or in this case taking serious amounts more of someone else's money (who will get no credit, or even demerit for it) via taxation for a specific problem, can be made morally neutral if it ends the need for itself. This is in the end why the moral consensus on torture is uncontroversial; it's not that it's inhuman, it's that it's ineffective. But government help and a relentless message of victimhood, of pity, of "can't win, don't try," has eroded ambition, has rotted the bottom out of the poor's bucket so that trying to get it to weigh more by pouring more into it from the rich bucket is futile. In the end, beyond politics and pity, whether one is getting richer or poorer all comes down to what's in a person's head, and at this point, that's where all the serious progress to be made is. Their objective ability to live on less is proven by the fact that some few do. You want to talk about morality? Keeping the poor's noses to the grindstone that way, as difficult, unpopular, unquantifiable and politically risky as it is, is the sole moral basis for wealth redistribution.

The depth of their situation today is more the side effect of the political monetization of pity than anything else.

"In the end, beyond politics and pity, whether one is getting richer or poorer all comes down to what's in a person's head, and at this point, that's where all the serious progress to be made is. Their objective ability to live on less is proven by the fact that some few do. You want to talk about morality? Keeping the poor's noses to the grindstone that way, as difficult, unpopular, unquantifiable and politically risky as it is, is the sole moral basis for wealth redistribution."

Handworn,

Moral or not, studies of the subject indicate that the poor work more when their income is supported by interventions such as the EITC. Internationally, labor force participation is higher in Sweden than it is in the US, their greater redistribution encourages work. The poor can certainly manage to live on less, but keeping their noses to the grindstone does nothing to encourage greater output. It may be necessary for your moral universe to give them money without keeping their nose to the grindstone, but if the objective is to instead encourage discipline and hard work it is well established empirically that the best way to do this is to give away money, moral or not.

Should have written "It may be morally necessary to keep the poor's noses to the grindstone to justify redistribution, but if the objective is to encourage discipline and hard work it is well established empirically that the best way to do this is to give away money, moral or not (through programs such as EITC, child care support, medical support, etc.).

This is an Obama-esque argument where one is given two stark options: neither of which is the correct answer. One can only imagine the torture the man goes through in being so wrong all the time.

The answer is that it is wrong to TAKE money from anyone, regardless of their wealth. It's no more moral to steal from a rich man then it is to steal from a poor man as you are suggesting. Naturally, we as human beings are compassionate and consider the circumstances in which the TAKING occurs but here it's even more wrong because the government is the richest and most powerful of any party, it is it that is doing the taking.

Sir you would do well to remember that for people with 2 perfectly good arms and legs to fail to receive their GUBMINT CHECK would be nothing less than the greatest violation of human rights in all history.

As for the rest you're barking up the wrong tree. I never said I had a problem with higher tax rates at higher income levels. My point is that for all the angry rhetoric about "the wealthy", the middle class has done poorly under progressivism.

Wow, what planet do you live on? You really believe these millionaires and billionaires have made their money fairly without any political influence and lobbying? I'm guessing you're a deluded Texan...please stop drinking FAUX news koolaid.

Ok- I can see your point. Up to your first million, that money is made the hard and good way. After the millionth dollar however, it's all based on corruption. I'm with you, but you gotta tell Obama to stop telling people how rich he is because all of his money over a million dollars was made from political influence and lobbying.

You think Obama is corrupt, I think Obama is corrupt. We all agree that he has to go! The only person wrong about this may be Obama... corrupt person that he is.

@M.S.: "If you argue it should be lower, you are arguing it's more moral to take more of the money to pay for government from poorer people, not from richer people. What is the grounding for that claim?"

The grounding for that is in the free rider problem, as I'm sure you well know. The more the poor and middle classes are under-taxed for the public resources they consume, the greater their incentive to demand ever-higher public spending.

If you believe that wealth redistribution is itself a legitimate goal of public spending, you might not consider this a problem (though it does seem to me a somewhat dishonest way of achieving this). However, if you believe that the goal of public spending should be only to provide those goods and services which the private sector is incapable of providing efficiently, then this is a major problem.

"If there were a general current among the poor of being all about spending as little as possible in order to invest, to claw themselves up and lead more stable lives, I'd be all in favor of giving them help via the government."

The poor don't have money for investment! Pay rent or buy food is all too common. You really don't have a clue what the poor are up against.

"Keeping the poor's noses to the grindstone.."

As Scrooge put it - Are there no work houses...

That's the problem with wealth, first it make you numb, then it make you blind.

"What are you talking about? We haven't had progressivism for the last 50 years!!!!"

What are *you* talking about? We've had a nearly unbroken string of progressive victories over the last 50 years. We have a considerable welfare state, affirmative action, E-Z divorce, feminism, a 40% illegitimacy rate, de facto open borders and no distinction between citizens and non-citizens in practice if not in law (yet).

Excuse me, but the Constitution makes it clear that Congress has the right to levy taxes. Nothing has to be done with it. It could even be burned in a giant pile.

Granted it's stupid that the government pays banks a 6% premium for the honor printing every US dollar, but you might guess now why deficit spending is so popular with the financial system. So look at it that way. The government isnt stealing your money, it's handing it over to Goldman Sachs!

"Excuse me, but the Constitution makes it clear that Congress has the right to levy taxes."

Yeah, you make a good point why it's pointless to even discuss things with the Left. The government doesn't have "Rights". Rights are endowed by The Creator to the People, and the People grant power to Congress for a set of well defined purposes.

If Congress is taxing the People and then taking their taxes and burning them before the People, it would suggest that Congress has overstepped the reason for its existence by abusing its power and it is not performing the duty it was established, by the People, to perform.

Even if one is to swallow the last item, which of these exactly is responsible for the deficit? Didn't the deficit bloat under first Reagan's military spending, then Bush II and Cheny-deficits-dont-mater's military spending? Donut holes and all. All these fisical moves occurred under a "conservative" swing.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

---
Subject to the public -wanting- the money to be burned. What seems missing in your conceptual framework is that Congress does what it does at the behest of their respective constituencies and that is a blend of donors and pablum for the public.

PS this is why I find the desire to assign left/right assignations diagnostic of severe mental complacency.

See the part that you miss by wedging me into the Left/Right Crips/Bloods ghetto think is that I'm all for dissolution of the States if it should continue it's disfunctuonity. Dissolve the union, and we won't be having this problem with it.

Ummm... I saw the word "Power". Did you see the word "Right"? If you did, let me know. A "Right" has a very distinct meaning and is not the same as "Power"

"PS this is why I find the desire to assign left/right assignations diagnostic of severe mental complacency."

Not really- there are those who don't trust individual freedom and demand a big state to tell people how to live, and those who cherish individual freedom and want to be left alone. It's the fundamental argument about government.

For instance, when it comes to marriage equality or which plants are OK to grow and consume, we have the nanny state "conservatives" at the ready to tell those lefties who "cherish individual freedom and want to be left alone" how to live their lives.

Because they evidently "demand a big state to tell people how to live" and "don't trust individual freedom"?

You either want a big state to support and guide you or you want to be free and to be left alone to follow your own destiny.

This issues like gay marriage- is this an example of why you think freedom is a hoax, or do you believe in the individual and this is a specific divisive issue for you and you really agree with individual freedom. If it's the latter, I don't understand your focus on what makes us different.

Um, the irony that both sides in today's culture wars, left AND right, believe in big government nanny states.

It's just that they're complementary (in a mathematical, not social sense) to each other.

The right wants a nanny state Land of the Free that imprisons more people per capita than any other country in the world, by far. And that doesn't let gay people get married. And coddles corporate "citizens" even more than the flesh-and-blood type.

Meanwhile the left wants a country in which no citizen, no matter how lazy or untalented, falls through the cracks. And even has rudimentary health care. And a roof. (And Cheetos...)

The two sides are like sneeches: some are the plain belly sort and some have stars upon thars, but they're all sneeches.

It may well be that we're not so different after all. But you were talking about the "right" and the "left", not us, implying that the "right" "cherish individual freedom and want to be left alone". Which just isn't true about today's right...

@heimdall-
"The right wants a nanny state Land of the Free that imprisons more people per capita than any other country in the world, by far. And that doesn't let gay people get married."

You seem to be obsessed over gay marriage so I'll tackle that one. What's being demanded is not the right to marry. You can marry anyone you want or thing you want and nobody can stop you. What's being demanded is the opposite of what you are suggesting- what's being demanded is that you want the government to compel me to accept and respect your marriage. You could marry a toaster and you want the government to force me to accept that arrangement and to treat you, and your significant other the toaster, as in matrimony.

I think you are a bit confused as to what is on the left, and what is on the right.

"If you argue it should be lower, you are arguing it's more moral to take more of the money to pay for government from poorer people, not from richer people. What is the grounding for that claim? I haven't seen anybody make it here."

--

I'm not sure that the "tax the rich" group can rightly claim the moral high ground. To say it's more moral to take money from a rich person is just a carelessly inserted political view. A libertarian could argue it's immoral to take anyone's self-made wealth.

Better yet, since poor people are actually the beneficiaries of the taxes paid by the rich, one could argue that cutting their benefits is the most moral thing to do, as it reduces the amount which must be taken from the poor, median, or rich people. (I am not suggesting this, just suggesting that you be more careful with claims of what is and isn't "more moral")

I think what's relevant isn't whats moral but rather what is possible. Taxes on the rich CAN be raised without forcing any of those who experience this raise to struggle to survive. More revenue is needed, the rich can most easily afford a tax increase with little effect on their spending (demand). Tax raises do impact economic growth so if they are needed the smart thing to do is place them where they cause the least damage...on those who can most easily afford them without causing drastic changes in their economic activity.

Greetings, Congressional delegation. Please place your Aperture Science-approved Supercomittee deficit proposal on this Aperture Science Supercolliding Superbutton. Please then vacate the room immediately, as prolonged exposure to the effects of The Button are not a part of this test.

Theories are beautiful and sparkly and all, and bring a tear to the eye, but the cold-hard reality wins. Fortunately, we have something I like to call "history" to give us a sense of that reality...

Let's look back to the last time the marginal income tax rates were higher and see if there was a difference in the economy then vs. now. That would be the '90's.

Was it a Great Depression, as the Republican theory would have us believe higher tax rates would encourage, as all the productive Americans headed to Galt's Gulch to avoid the parasitic hordes and society collapses under its own redistributionist weight? Or was it a time of plenty and fiscal rectitude, with all Americans funding the cost of society in closer proportion to their usage of governmental infrastructure as Democrats would have us believe?

Indeed, we can take the exercise back further, looking to an era of a long-haired hippie named Eisenhower. The top tax rate was in the 90's back then! Talk about wealth redistribution! The 1950's must have been an economic dystopia! No company would hire! No job creator would work at all in those conditions! Total financial meltdown!

That would be Republican theory, right? And the reality was...

So for all the barking about how we need to cut taxes on the wealthiest Americans, I suggest that Democrats go to their toolbox to find the most potent counter-weapon available: reality.

It's about Generation Greed. They want everything they have promised themselves but have been unwilling to pay for. And they don't want to leave anything for those coming after. On this, Republicans and Democrats agree.

Should all members younger generations pay higher taxes throught their lives than Generation Greed? Or should they face poverty, deprivation and death without government benefits in old age after paying more if they are in bottom 75 percent? That is the disagreement.

The automatic cuts should have been limited to slashing Medicare and Social Security for those collecting right now.

What amazes me is that the Euro technocrats are forcing "reforms" on their member states to make their economies more like those of the US and America. Meanwhile their two model states are running huge deficits and barely growing. What's wrong with this picture?

If Tax Evasion were the issue this would be a bankruptcy declration for any nation state right away. The argument that you can't tax the rich since they would just evade taxes is ridiculous. We still assume to be living in a state that is governed by law and populated by law abiding citizens. We can also assume that we live in a society where people recognize their responsibitlty for the common good - and that includes the rich.

Clearly, raising taxes requires the closing of loopholes - as the democtrats suggest - and not only establisihing a top marginal tax rate at some arbitrary figure. But foremost, if we like to think that we live in a democracy then we have to assume that we can pass laws that will be enfored if passed by due process. Otherwise we might as well concede that the Republicans have succeeded in draining democracy in the bathtub.

Personally I would not be against an across the board tax increase of say 5% (not percentage points, but 5% of the current rate) - that would be the definition of "sharing". There are many other ways that the gov't could make up funds - start taxing S Corp income for Social Security purposes - no reason not to. We also have a problem in the middle with non-reported income, but I don't have any idea how to make that up (the idea of a VAT or national sales tax scares me).

One of the core arguments the Republicans have is that a tax increase is tantamount to increasing the government's take of GDP and for the Democrats, their party platform is that the government should always have an increasingly larger and larger take of economic activity.

Put in that perspective, which is the useful perspective from an economics perspective, then what the Democrats are trying to do is reprehensible because the larger the government take of economic activity becomes, the more difficult it becomes for the economy to grow and manage the deficit. Moralizing over how much more in taxes your better off neighbor can chip in is useless in this economics discussion.

One easy test for analyzing the work of theoreticians (in economics and other "soft" sciences as well as the "hard" ones) is to look for hidden assumptions by taking boundary conditions to the extreme.
Here it is easy to identify the fundamental assumption because the theoreticians did it themselves and openly proclaim it: the analysis presupposes the government's ability and *right* to take *all* the income of any designated subset of the population and assumes that it is providing said individuals with the "boon" of refraining from taking *all* of it.

To put it bluntly, the analysts pressume the government owns *everybody's* income and they are doing us a favor when they choose *not* to tax: their baseline is 100% taxation.

That much is pretty clear in both their statements and the policies that flow from their analysis: when the question changes from how much to tax to how much people should be allowed to keep, the basic premise is that the government *owns* the population and the fruits of all their labors and can "manage" their income as it sees fit.

Historically, there is a word for people who are taxed 100% of their income: S-l-a-v-e-s.
Historically, there is another word for people who are granted the "boon" of retaining just enough of the fruit of their labors to keep them from revolting: s-e-r-f-s.

Obviously, these theoreticians are comfortable with both these human conditions.

Me, I'm comfortable knowing that they are not in government, but I would be more comfortable if their *ideas* were not receiving such serious consideration by those that are.

Benjamin Franklin: He that does not like Civil Society on these Terms, let him retire and go live among the Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.

Though I won't dispute your definitions of the historical terms, I would like to point out that when taxation formulas are applied to top-tier income earners (as is discussed in the article), the equating of Goldman Sachs execs to "serfs" gets a little nebulous.

Here is an article that outlines what happened during the world's largest sovereign debt default, how lessons have not been learned by those who control the world's finances and how the story is still not over a decade later:

"largely due to a fundamental disagreement over the question of whether rich people should pay more in taxes."

Why do we never have a disagreement over useless welfare sponges? Why do middle class working people, not the monocled top hatted "wealthy" of leftist rhetoric, have to hand over a quarter or a third of their income to various level of government? Why do they have to scrape while others get food (EBT) and housing (section 8) for free?

We've heard enough from your type that's for sure. Kicking the poor is sport for you. How about putting away the jackboots and coming up with some reasonable ideas on how to solve the problems of Western society. An Econmoist subscription doesn't make you an intellectual.

Contrary to belief one does not receive 'section 8' for free. An applicant must use thirty percent of their monthly wages towards rent. Section eight then covers what is left over. These individuals work, and see a substantial amount of their pay go towards rent.

Why hand over 1/3 of your income? For defense, the FBI, social security, medicare, and to pay interest on the debt.

Why fund welfare? Three reasons. One, because it's preferable to being robbed or lynched by the starving unemployed. Two, because it ensures people cannot be enslaved by their employer -- they always have a guaranteed other option. Three, if you're a Christian, because Jesus explicitly told you to in the Sermon on the Mount. "If you did not do this for the least of my brethren, you did not do it for me."

So: Safety, Liberty, and Christianity. Aren't those supposed to be conservative principles?

"There are a number of potential objections to the way the authors frame the "optimal" top marginal tax rate, but the obvious ones most people would think of are already covered in the paper."
I suppose one potential objection that a respectable paper cannot research and therefore cannot answer is the cost of tax evasion. If marginal tax rate is too high, then the return on tax evasion becomes high enough to make it near-universal (I am assuming no moral scruples exists among billionaires).